S&P rates Michaels loan B+

S&P said it assigned the Michaels Cos. Inc.’s planned $1.62 billion senior secured term loan a B+ rating with a 2 recovery rating. The 2 recovery rating reflects an expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default.

The agency also affirmed the company’s B rating as well as the CCC+ rating on Michaels’ senior unsecured notes due 2027 with a 6 recovery rating indicating an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

“The proposed transaction will improve the company's maturity profile and allow sufficient liquidity to manage through residual volatility stemming from the coronavirus pandemic,” S&P said in a press release.

S&P also revised the outlook to positive from negative. “The positive outlook reflects our view that successful implementation of Michaels' initiatives may alleviate recent declining market share trends. We may upgrade the company if we expect it to maintain its competitive position with less volatile operating results following the coronavirus pandemic,” the agency said.

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